St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1887-09-03
The Baltimore & Ohio No
Longer to Be the Ishmae-
lite Of Railroads.
A New Deal Consummated
Which Places 1t in Har-
mony With the Others,
And Turns Its System Over
to the Western Union---
Details.
The Duluth, Red Wing & South
ern Railroad Company to
Build at Once.

New YORK, Sept. 2.-The mysterious
movement of the stock market during
the past week and the continued rumors
from all sources that some important
developments were hanging over the
railroad and telegraph world, were eX-
planned by facts which were made pub
lie late this afternoon. After breaking
off his negotiations with Ives Il Co.,
Mr.. Garrett went to London, where the
negotiations were continued with j. S.
Morgan and to-day deal was an
nounced comparable in Importance with
the West Shore settlement with the
New York Central and the forming of
the Reading syndicate to recognize that
company. Both of these deals were
carried through by DreXel, Morgan &
Co., bnt in the latter case Edward Lau-
terbach was the most prominent figure
as mediator between the Gowen and
DreXel interests and in the agreement
now made he also takes a prominent
place. The cOnSummation of the con-
tract made to-day was held in allegiance
until his opinion was obtained on the
question of whether the sterling loan
made by the Baltimore d Ohio railroad
covered the telegraph system of the
company. After studying the question
IN all its aspects, he decided that the
telegraph lines were free from all liens,
and on receiving this opinion the agree
ment in the nature of preliminary con-
tract was executed to-day. The parties
to the contract are the Baltimore Il Ohio
Railroad company and a syndicate COM
posed of j. S. Morgan d Co., Barring
Bros. & Co., Brown, Shipley &
Co., of London, Drexel, Nor
gan Il Co. and Brown Bros.dt Co, of this
city, and DreXel d Co., of Philadelphia.
The most important point in the con-
tract provides that the management of
the company shall be placed in compe-
tent hands satisfactory to the syndicate.
Who the men are who will be satisfac-
tory to the syndicate cannot be aScer-
tanned, but a. j. Cassatt, the vice presi-
dent of the Pennsylvania railroad, is
generally believed to be booked as Mr..
CARROTS successor. Satisfactory con-
tracts are also to be made with the
Pennsylvania and Reading railroads on
all business north of Philadelphia, and
with all the other trunk lines entering
New York, by which all antagonist
will be removed and insure the perma-
nent working of the Baltimore d Ohio
in harmony with the other trunk lines.
In addition to these contracts the lines
in process of construction from Philadel-
phia to New York
WILL BE SUSPENDED
in their construction Just as they now
stand, and the work on Staten Island
stopped. In consideration of these con-
tracts being signed, and with the con-
troll in their hands, the syndicate agree
to relieve the railroad from its present
embarrassment by providing 100000
with which to take up the floating debt.
This will be represented by $1,000, 900 in
Baltimore q Ohio consolidated IS and
S5,000,000 preferred stock. The floating
debt. as it stands, amounts to s., OOO. 600.
mostly in the shape of certificates of in
debtedness, scrip and notes. Of this
amount S4,000,000 is said to have ma
tured on the 1st inst. One of the parties
to the syndicate authorized the follow
ing statement as the outcome of the
contract: 1.-The position of the Balti-
more & Ohio railroad as an Ishmaelite
in the railroad, sleeping car,
express and telegraph business
is given up. Ali the outside
enterprises will be sold to parties to
whom they will be valuable. The West
ern Union viii control, if it does not
buy the telegraph lines; and the Pull
man Palace Car company will take the
sleeping car business. The express
business has already gone to the United
States Express company. The affairs
OF the railroad company will be entirely
re-OrganiZed and placed upon a sound
financial basis" DreXel, Morgan & Co.
were in Correspondence all day with
their houses in London and Philadel-
phia and late i'll the evening confirmed
the statement that the contracts and
negotiations given above had been Just
signed. Outside of the facts given
above they declined to speak. The
clause of the contracts suspending all
work on the extension from PhiIadel-
phia to New York is believed to be
THE KEY NOTE
of the Syndicate'S interest in the nego-
tiationS, and is construed to mean that
the Baltimore & Ohio railroad, when
Invested of all eXtraneous enterprises.
will be operated practically by the
Pennsylvania railroad. The following
has been issued by the firm of DreXeI,
Morgan d Co.:
preliminary contract has been executed
to-day between the Baltimore q Ohio Rail
road company, Barring Bros. d Co., and
Brown, Shipley d Co, London, and their
allied houses on this side. This contract
provides for the negotiat ~ of S., 600 600
Baltimore & Ohio IS and 100000 Balti-
more u Ohio preferred stock for the purpose
of paying off the entire floating debt of the
company and placing it on a sound financial
basis. The conditions are as follows:
First-The Yerifcation of statements, etc.,
as made
Second-That the management of the COM
pany shall be placed In competent hands,
satisfactory to the syndicate.
Third-That satisfactory contracts shall be
made between the Baltimore d Ohio and the
other roads for New York business which
shall remove all antagonism between them
on the subject and insure the permanent
working of the Baltimore & Ohio in entire
harmony with the other frank lines also
avoid construction or threat of construction
of expensive parallel lines north and east of
Philadelphia. The houses interested on this
tide are Drexel, Morgan q Co.. Drexel & Co.,
Brown Bros, Kidder Peabody d Co.
WHAT 1T MEANS,
Special to the Globe.
New YORK, Sept. 2.-The meaning
of the official statement given above is
very clear. 1t means the retirement of
Robert Garrett from the active manage
ment of the great property, created by
the energy and ability of his father; it
means that the Baltimore & Ohio has
become crippled financially by its long
and expensive fight for entrance into
New York city and by its maintenance
of an improbable telegraph system in
opposition to the Western Union; it
means that combination of capitalists
have agreed to come to the financial
assistance of the road and
by the negotiation of $4,000, 900 of secu-
rites to place it on a sound basis. 1t
means that the syndicate does this on
conditions which must appear very hard
to Mr. Garrett, as they place the Balti-
01.:. - =, h., H., &c :,